In a hostile takeover bid, Kraft Foods has sought to buy the UK based Cadbury for $16.7Bn. If this deal were to go through it would create a giant in the pantry! Kraft is an American food giant while Cadbury is one of UK’s largest food companies. Cadbury has already rejected the bid saying that it was too low.

Could one of the other food giants like Nestle or Hershey’s jump in to the fray? Maybe to make it difficult for Kraft to get hold of Cadbury? Could this spark a bidding war, in the event of which Cadbury’s shareholders might stand to benefit. Krafts shares have alreadyd taken a beating on fears of overpaying.

Read the article here and here.

Update: The latest in the Kraft- Cadbury saga can be read here.

Questions

What is a hostile takeover bid? Who, if anyone, benefits in a hostile bid and who loses out?

What are the benefits of this deal to both Kraft and Cadbury?

What could be the potential pitfalls for this deal considering that many mega M&A do not deliver up to the promises made?